Rainbow Tax Service, Inc. - Page 6

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          performing covered services.  Sec. 1.448-1T(e)(4)(i), Temporary             
          Income Tax Regs., supra.  In calculating the amount of employee             
          time spent performing covered services, administrative and                  
          support services incident to covered services are treated as                
          covered services.  Id.                                                      
               Section 448(d)(2), the regulations thereunder, and court               
          opinions generally do not define accounting services.2  However,            
          in section 1.448-1T(e)(5)(vii), Example 1(i), Temporary Income              
          Tax Regs., 52 Fed. Reg. 22770 (June 16, 1987), the preparation of           
          tax returns and audit and financial statements are treated as               
          accounting services:                                                        

                    X, a corporation, is engaged in the business                      
                    of providing accounting services to its                           
                    clients.  These services consist of the                           
                    preparation of audit and financial statements                     
                    and the preparation of tax returns.  For                          
                    purposes of section 448, such services                            
                    consist of the performance of services in the                     
                    field of accounting. * * *                                        

               Petitioner concedes that, if tax return preparation and                
          bookkeeping services constitute accounting services, by virtue of           
          Rodgers’ and Rodgers’ estate’s ownership of petitioner’s stock,             
          the above ownership test has been satisfied.                                

               2  In Ron Lykins, Inc. v. Commissioner, T.C. Memo. 2006-35,            
          the parties did not dispute that tax return preparation services            
          constituted accounting services.                                            

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